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Building Owners Could Face Far Reaching Consequences For Non-Compliance

An independent consultation with the insurance industry has thrown up a stark warning for building owners and property manager who could face huge losses for not complying with energy efficiency legislation.

It has been confirmed that under standard buildings insurance policies, an insurer could avoid paying out where the property did not have a valid air conditioning inspection report.

Since their introduction in the European Energy Performance of Buildings Directive (EPBD) and subsequent UK implementation via the Energy Performance of Buildings Regulations 2007, air conditioning inspections have largely fallen under the radar for building owners and managers. Unlike the much publicised Energy Performance Certificates (EPC’s) many building owners are not even aware of the need to have a statutory inspection on their air conditioning system carried out every 5 years.

Insurance expert Gordon Campbell of WTE Insurance said ‘there are a lot of vicarious liabilities that can arise for landlord that they aren’t even aware of, especially for sophisticated landlords with large portfolios’

Unlike EPC’s, air conditioning inspections are not triggered by sale or rental – definite deadlines were put in place that have been far too easily ignored. Large systems (i.e. those with an effective rated output of greater than 250kw) should have been completed by 4 January 2009. Government accreditation bodies, such as CIBSE, which oversee the undertaking of inspections, estimate that only 5-10% of the systems that needed to be inspected by the 2009 deadline have had an inspection.

The cry from the industry is that many clients do not care about the potentially significant energy savings that a high quality, independent inspection report can identify, they simply see it as a cost they could do without and the threat of fines is a risk that they are willing to take.

Many property and building owners don’t realise is that standard buildings insurance policies may not pay out where a property does not comply with all relevant legislation in force, which includes air-conditioning inspections. It won’t be long before the first test case comes along and the chances of it ending favourably for the insurer are high. Given that the threshold for inspections lowers to 12kw as of 4 January 2011 the costs to building owners could be catastrophic in an already fragile economy. Gavin Clapp